Hamburger Hafen Says Russia Sanctions May Hurt Earnings

March 27 (Bloomberg) -- Hamburger Hafen & Logistik AG, the
handler of about three in four containers at Hamburg’s port,
dropped the most in five years after it warned that sanctions
against Russia as a result of the Ukraine crisis may cause
earnings to fall this year.

HHLA, which also runs a container terminal in the Ukrainian
port of Odessa, forecast today that earnings before interest and
taxes this year will be 138 million euros ($190 million) to 158
million euros, falling short of the 161 million-euro median
estimate of four analysts in a Bloomberg survey.

“We had expected a cautious outlook, and due to 9 percent
downside to the 2014 estimates we clearly expect pressure” on
the stock, Johannes Braun, a Frankfurt-based analyst at
Commerzbank AG, said in a research note.

Earnings at HHLA and other logistics companies may be hurt
by economic measures against Russia following its annexation of
the Crimea region, as the country is Hamburg’s most important
trade partner after China. The sanctions may add to negative
effects of container-industry consolidation and a delay in
dredging the Elbe River at the port, Chief Executive Officer
Klaus-Dieter Peters said at a news conference in Hamburg.

“Achieving a result in the 2014 financial year that is on
a par with that of the previous year remains an ambitious
target,” HHLA said in a statement. The company proposed a
dividend of 45 euro cents a share, down 31 percent from a year
earlier.

Share Decline

HHLA shares fell as much as 12 percent, the steepest
intraday drop since Nov. 20, 2008, and were down 7.7 percent at
18.04 euros at 3:34 p.m. in Frankfurt. That pared the gain this
year to 1.5 percent, valuing the company at 1.31 billion euros.

HHLA had not experienced “disturbances” related to the
Russian-Ukrainian dispute at its Odessa terminal in recent
weeks, but risks remain, Peters said.

Even so, the conflict might have a positive outcome for the
company, according to the CEO. “A positive scenario would be
that the EU supports Ukraine economically, which would certainly
boost exports and which would be positive for us,” he said.

Ebit declined 15 percent last year to 158 million euros,
the Hamburg-based terminal operator said, confirming preliminary
figures published on Feb. 6. Net income dropped 25 percent to
54.3 million euros while revenue rose 2.4 percent to 1.16
billion euros.

The company plans “to strengthen its position in the
handling of mega-ships and expects container handling volumes to
increase slightly,” Hamburger Hafen said.

Container volume last year rose 4.4 percent to 7.5 million
standard 20-foot boxes, or TEUs, as feeder traffic to the Baltic
Sea and Russia grew, countering a contraction in the northern
European market. Revenue this year will rise “slightly,” the
company said.

Transfer Competition

Hamburg, Europe’s second-biggest container port, is
competing with other north European ports such as Rotterdam and
Antwerp, Belgium, for transshipment, or transferring containers
from deep-sea ships from Asia to smaller feeder vessels destined
mostly for the Baltic countries and Russia.

Hamburg also seeks to handle an increasing number of big
ships. That has been hampered as a dredging project to deepen
and widen the Elbe connecting the port and the North Sea has
been suspended because of a lawsuit by environmentalists.

“To improve our handling of large vessels, we have pro-actively created capacity and productivity reserves,
particularly at our Container Terminal Burchardkai, from which
we will benefit as utilization continues to increase,” Peters
said in the statement.

The CEO said he expects a court decision on the Elbe
dredging in the second half of the year.